Top 3 Things To Do When Selling and Buying a Home at the Same Time
If you’re a homeowner and are thinking about moving, you may be wondering if you should look for a new home before selling yours or sell your home before you buy. Oftentimes, the timing in these situations doesn’t perfectly align, so knowing what to expect can help you decide whether you’d prefer to buy or sell first.
Before we jump into the nitty-gritty, we took a quick poll with the folks around our office about their experience buying and selling a home. Everyone replied with the same answer: “It was stressful!” While that may be true and not all that surprising, there are steps you can take to make sure your experience goes as smooth as possible.
1. Know Your Market
When we asked the home buyers and sellers in our office for one piece of advice they would give others about to embark on a similar journey, they all said to know your market. Understanding the market you’re interested in will help ensure you don’t miss out on a home you truly love because you waited too long to put in an offer in a seller’s market.
Conversely, if you’re thinking of selling your home first, you should know how much the homes in your neighborhood are selling for. You could even attend a couple of open houses to see what other homeowners have to offer. Hey, it never hurts to scope out the competition! But keep in mind, when it comes to knowing your market, your most valuable resource will be your real estate agent. They’ll be your trusted advisor, finding out how much homes are selling for and how long they’ve been on the market, so you know what to expect whether you decide to buy or sell first.
2. Understand Your Finances
Once you understand the condition of your market, you should consult with your mortgage banker about your finances. Figuring out how much you can afford will allow you to set realistic expectations on pricing your home and making an offer.
If You Decide to Sell First:
You won’t have to worry about the potential burden of carrying two mortgages. Not to mention, most homeowners need to sell their home before they can financially qualify to buy a new one. But keep in mind, you may still have to take on additional costs if you sell your home before you find a new place. Below you’ll find a few of your options if you decide to sell first.
- Find a temporary place to stay. You can rent a condo or an apartment to stay in while you’re between homes. With this option, you may also have to pay to store some of your belongings until you find a new home. Or, if you’re lucky, you can crash with friends or family until you find a home you love.
- Negotiate with buyers. You can ask your agent to negotiate with your buyers and their lender to let you stay in your home for an additional 60 to 90 days. This is typically in exchange for a lower listing price or rent paid directly to the home buyers. It also gives you some extra time to stay in your home until you find the right place.
If You Decide to Buy a Home First:
You’ll want to keep in mind that most of the country is in a seller’s market right now. That means inventory is tight and many homes are flying off the market. So you should have few options up your sleeve in case you find your dream home before selling your current place. Below we’ve listed a few choices if you decide to buy first.
- Include a sale contingency. This means your offer is dependent upon your home selling. But keep in mind, this may make your offer less desirable in a competitive seller’s market. On the other hand, if a home seller hasn’t received much interest in their property, your offer with a contingency may be the best solution for everyone!
- Get a bridge loan. Another option is to take out a bridge loan, which allows you to own two homes simultaneously without having to spend all your personal savings. A bridge loan helps you cover the cost of purchasing a new home while still paying your original mortgage. With this option, you can put in an offer without a sale contingency, which will make your offer more appealing.
- Prepare to be a landlord. If you end up buying a home before selling yours, you can rent out your place to cover your mortgage payment. However, if you lease your home, you’re still responsible for making repairs and various other responsibilities. So make sure you research the pros and cons of being a landlord before landing on this decision.
3. Make a Plan
Now that you know your options, it’s time to come up with a plan. Whether you decide to buy or sell your home first, be prepared to deal with the outcome. This could possibly mean storing your stuff and temporarily renting a place or handling the financial burden of carrying multiple mortgages at once. As we mentioned above, you have numerous options to choose from, it’s just talking with your real estate agent and figuring out which one is right for you!
Keep in mind, your plan will depend on the buyer or seller on the other end of the transaction. Even if all goes well on your end, the process may not be so seamless on the other side. It’s important to have a backup plan just in case things go off track.
It’s no secret that buying and selling a home can feel overwhelming at times, but following these steps and working together with your real estate agent will put you on the right track to having a smooth experience.